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Avoiding the worst

Summary:
Will the Covid-19 crisis precipitate the end of the financial and liberal globalisation of markets and the emergence of a new model of development which would be more equitable and more sustainable? It is possible but nothing is guaranteed. At this stage, the most urgent concern is primarily to grasp the extent of the current crisis and to do everything possible to avoid the worst, which is a full-scale hecatomb. Let me remind you of the forecasts in the epidemiological models. Without intervention, Covid-19 could have caused the death of some 40 million people in the world, of which 400,000 in France, or approximately 0.6% of the population (over 7 billion people in the world, of which almost 70 million in France). This corresponds to almost one additional year of deaths (550,000

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Avoiding the worst

Will the Covid-19 crisis precipitate the end of the financial and liberal globalisation of markets and the emergence of a new model of development which would be more equitable and more sustainable? It is possible but nothing is guaranteed. At this stage, the most urgent concern is primarily to grasp the extent of the current crisis and to do everything possible to avoid the worst, which is a full-scale hecatomb.

Let me remind you of the forecasts in the epidemiological models. Without intervention, Covid-19 could have caused the death of some 40 million people in the world, of which 400,000 in France, or approximately 0.6% of the population (over 7 billion people in the world, of which almost 70 million in France). This corresponds to almost one additional year of deaths (550,000 deaths per annum in France, 55 million in the world). In practice, this means that for the most affected regions and during the darkest months, the number of coffins could have been 5 or 10 times more than usual (which we have unfortunately begun to observe in some of the Italian clusters).

However uncertain these estimates may be, these are the forecasts which have convinced governments that it was not a question of a simple case of flu and that it was essential to confine populations as a matter of urgency. True, nobody really knows exactly how high the losses in human life will rise to (at the moment almost 100,000 deaths in the world, of which almost 20,000 in Italy, 15,000 in Spain and the United States and 13,000 in France) nor how high they might have risen without confinement. The epidemiologists hope that they will succeed in dividing the final figure by 10 or by 20 in comparison with the initial forecasts but there is still considerable uncertainty. According to the Report published by Imperial College (London) on 26 March 2020, only a policy of mass testing and isolation of those contaminated would enable a strong reduction in these losses. In other words, confinement will not suffice to avoid the worst.

The only historical precedent to which we can refer is that of the Spanish ‘flu in 1918-1920.We now know that there was nothing ‘Spanish’ about it, and that it caused some 50 million deaths in the world (almost 2% of the world population at the time). On the basis of civil registration data, researchers have shown that this average mortality concealed huge social disparities: between 0.5% and 1% in the United States and in Europe, as compared with 3% in Indonesia and in South Africa and over 5% in India.

This is what we should be concerned about: the epidemic could rise to record numbers in the poor countries where the health systems are not able to cope with the shock particularly as they have been subjected to austerity policies imposed by the prevailing ideology in recent decades. Confinement implemented in fragile ecosystems may moreover prove to be totally inappropriate. In the absence of a minimum income scheme, the poorest will rapidly have to go out to seek work which will re-launch the epidemic. In India, confinement has primarily consisted in driving rural people and migrants out of towns which has led to violence and mass displacements, at the risk of heightening the spread of the virus. To avoid the hecatomb, what is required is a social State, not a prison State. The right reaction to the crisis should be to revive the rise of the social State in the North, and most importantly to accelerate its developement in the South.

In response to the emergency situation, the requisite social expenditure (health, minimum income) can only be financed by borrowing and money creation. In West Africa it is an opportunity to re-think the new common currency and use it to serve a development plan based on investment in young people and infrastructure (and not use it to serve the capital mobility of the richest). The whole structure should be supported by a more successful democratic and parliamentary structure than the opacity still the norm in the Euro zone (where Ministers of Finance continue to meet behind closed doors with the same inefficiency as they did at the time of the financial crisis).

In a short space of time, this new social State would demand a fair tax system and an international financial register to enable it to involve the richest and biggest firms as far as is necessary. The present regime of free circulation of capital, set up as from the years 1980 – 1990 under the influence of the richest countries (and especially of Europe) encourages evasion by the millionaires and multinationals from all over the world. It prevents the fragile fiscal administrations in the poor countries from developing a fair and legitimate tax system which seriously undermines the construction of the State.

This crisis is also an opportunity to consider a minimal provision in public health and education for all the world’s inhabitants financed by a universal right for all countries to a share of the tax revenues paid by the wealthiest economic actors in the world: major firms and households with high incomes and personal wealth (for example, ten times higher than the world average, or the 1% richest in the world). After all, this wealth is based on a world economic system (and incidentally on several centuries of ruthless exploitation of the human and natural resources of the planet). It therefore demands regulation at world level to ensure its social and ecological sustainability, with in particular the implementation of a carbon card enabling the prohibition of the highest emissions.

It goes without saying that a transformation of this nature demands the re-consideration of a number of issues. For example, are Macron and Trump ready to cancel the fiscal gifts made to the wealthiest at the beginning of their mandates? The answer will depend on the mobilisation of both the opposition and of their own supporters. We can rest assured of one thing: the major politico-ideological upheavals are only just beginning.

Links :

Summary of March 26 2020 Imperial College Report https://www.imperial.ac.uk/mrc-global-infectious-disease-analysis/covid-19/report-12-global-impact-covid-19/

Full Report : https://www.imperial.ac.uk/media/imperial-college/medicine/mrc-gida/2020-03-26-COVID19-Report-12.pdf

Reference article on mortality during Spanish flu 1918-1920 (on line on The Lancet, 2007): Murray, Christopher, Alan D. Lopez, Brian Chin, Dennis Feehan, and Kenneth H. Hill (2007). “Estimation of Potential Global Pandemic Influenza Mortality on the Basis of Vital Registry Data from the 1918–20 Pandemic: A Quantitative Analysis.” The Lancet 368, no. 9554: 2211–2218.

Article Barro-Ursua-Weng NBER 2020 on Spanish flu (using Murray et al 2007 mortality estimates): https://www.nber.org/papers/w26866.pdf

Thomas Piketty
Thomas Piketty (7 May 1971) is a French economist who works on wealth and income inequality. He is a professor (directeur d'études) at the École des hautes études en sciences sociales (EHESS), associate chair at the Paris School of Economics and Centennial professor at the London School of Economics new International Inequalities Institute.

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